Support for patent office, reform bill

SAN JOSE, Calif. – Backing for a draft patent reform bill in the U.S. Senate appears to have waned while support is rising for a more recent proposal to give the patent office more funds to deal with its historic backlog of applications. Observers say neither initiative is likely to pass in the current Congress though change is urgently needed.

A patent reform bill that passed out of the Senate Judiciary Committee last year has lost key industry backing, say several sources. A separate bill introduced in May to bolster funding for the patent office faces "a civil war" between warring House committees, said one observer.

"The prospects are fairly limited," for all the proposed bills, said Paul Michel, formerChief Judge of the U. S. Court of Appeals for the Federal Circuit and co-author of a text book on patent law.

Since retiring from the bench May 31, Judge Michel has become a vocal advocate of giving the patent office a billion dollars of the economic stimulus funds to cope with an estimated backlog of 750,000 applications. Michel co-authored a guest editorial on the topic in last week's New York Times.

The "archaic IT systems" and high turnover among patent examiners has created "an alarming situation" at the patent office that "requires extraordinary measures," said Henry Nothhaft, chief executive of Tessera Technologies (San Jose), co-author of the editorial.

Henry Nothhaft

The patent office hires many new examiners straight out of college, but as many as 30 percent leave in their first year, said Nothhaft of Tessera which owns more than 2,000 patents and licenses technology for packaging semiconductors.

"I am not sure even a billion dollars is enough, but we could make a big dent in the problems and work the backlog down," he said. "With 750,000 patent applications waiting for a first action and another 400,000 filed every year, you have to wonder what industry is waiting to be created," he added.

In May, Rep. John Conyers (D., Mich.) proposed the Patent and Trademark Office Funding Stabilization Act which would give the patent office the right to set its own fees and stop the practice of diverting some of those fees to other uses. However, Michel said the draft bill from the House Judiciary Committee faces strong opposition from the House Appropriations Committee.

Separately, President Barack Obama on Wednesday (Aug. 11) signed into law a bill that gives the patent office the authority to spend an additional $129 million of the fees it will collect in its current fiscal year. The agency projects it will collect nearly $200 million more than its current annual appropriation of $1.887 billion, thus about $70 million of current fees will still be diverted to other government uses.

Nothhaft said he is working to get the Innovation Alliance--a lobbying group of about 20 companies including Dolby, LSI, Qualcomm and Tessera—to take up the issue of support for the patent office. If within a few months the group does not take up the charge, he said he is willing to back a new think tank on intellectual property under consideration by retired Judge Michel.

Michel said several companies and law firms have expressed willingness to back a new group that could conduct original research and provide education to policy makers on patent issues.

"I am considering and seeking advice from IP leaders about the utility of creating a research and analysis organization, and I am eager to do it if it's useful and would add value," said Michel.

Nothhaft said he believes the diverse set of often warring patent lobbying groups could unite behind the idea of bolstering support for the patent office. "Then maybe a patent reform bill could get passed," he said.

The Coalition for Patent Fairness was instrumental in getting the current patent reform bill drafted in the Senate. However, Michel, Nothhaft and others said the group stopped backing the bill after Sen. Leahy announced an amendment to the bill in March modifying several of its provisions.

The Patent Fairness group--whose members include Cisco Systems, Hewlett-Packard, Intel and Microsoft--issued a warning in September 2009 about amending the original reform bill. Since that time the group has kept a low profile. A representative of the group was not immediately available for an interview.

The Leahy bill sought to put limits on patent infringement suits and increase opportunities to challenge new patents after they were granted. The March amendments watered down provisions for some of those challenges and also made it more difficult to obtain a ruling of willful infringement of a patent.

The rising costs of patents (including USPTO fees) has become a barrier to small companies and technology inovators. The average costs for USPTO fees alone is close to $1,500 (see chart here: http://patentfile.org/howmuchdoesitcosttopatentanidea/) Thankfully, with the passage of the America Invents Act, there will be a new "micro entity" status that will give a 75% break to individuals and university inventors.

Yes, I would strongly support spending 1 Billion dollars on helping the US Patent office. I have already emailed, the President, my Senators, and Congressman, as well has had face-to-face with my local State Senator. We can spend BILLIONS on war, I vote 1 BILLION dollars (or more if needed) to invention & creativity, which will led to jobs and economic growth. I think patent requests should be turned around in LESS THAN 1 year. And if this goes through the Patent Office wants to Hire 1,200 people TODAY to review patents. It's a no brainer!

It's unfortunate (though not unexpected) that Congress has once again failed to pass much-needed patent reform. To me, the Conyers bill's provision that would have prohibited fee diversion seemed like a no-brainer. Looks like that extra $129 million recently returned to the USPTO (via legislation signed into law by President Obama) will be needed more than ever.
http://www.aminn.org/webcast-aipr-patent-reform-presentation-us-patent-and-trademark-office

It seems to me that appropriating $1B out of nearly $800B of the stimulous package to address the huge backlog of the patent office is a no brainer. Considering that timely patent prosecution is critical to maintaining the competitive advantage of the US high-tech industry and increasing our exports (resultiing in GDP growth), I don't understand why Congress is not moving on this.

When people write about the loss of mojo in the US, this type of article makes you think they have a point. As US lags, the world will catch. It will get to a point where US patent will not lead the world. Someone, Europe or China may decide to invest resources and challenge the US as the most sought out patent. But the biggest economy must learn that it was not the biggest three centuries ago. US must continue to work harder in simple things to stay ahead.

RE: betajet's comments:
Raise fees? Didn't the original
article say that $70M of fees is
still being diverted to some general fund?
Amen on killing many categories like most
software.
betajet's last point is actually a
revelation to the true nature to
the current US patent system. It
assumes that examiners will be able
to determine obviousness. This
assumption is made, despite little
experience in the field, and the
examiner having to cover several
different areas. Any real contention
will be litigated anyway, so I question
the value of determining obviousness at
this stage. IP needs to be protected,
but this is not the way to do it.
The absolute maximum job of the USPTO
should be to maintain a record of
claims and confirm the claims are
in some standard format. The determinating
whether the claims are worth anything
should be left for litigation, if it ever
happens. Attorneys are currently double
(triple?) dipping on IP. They get paid
at application, then again at litigation.
And some people want to add a third
opportunity. The argument that any
change of the patent system will
result in some mad rush to massive
litigation is largely bogus. Companies
that are large holders of patents are
constantly hiring IP speciality firms
to review their collection for value in
litigation. Most patents do not have
such value, even before considering
whether there has been any infringement.
I see no reason to believe that such an
assessment process will suddenly stop
once we realize the USPTO cannot
realistically check for obviousness.

Why is the patent office technology stale and obsolete? Perhaps the solution is to separate it from the government bureaucracy, like the post office. There are few that would deny that the post office technology is first-rate and continually undergoing improvement (even though they cannot make a profit); they have their own engineering staff that produces highly automated and computerized solutions.

IMO the patent office should raise fees if they're having problems with their backlog. From what I've read and heard, USPTO fees are a small part of the legal costs of filing a serious patent. People filing patents expect to get some kind of financial reward from doing so -- why should the public be subsidizing this?
If they want to clear the backlog, start by rejecting immediately all abstract patents, e.g., software and business methods. Anything that can in principle be performed mentally, perhaps supplemented with pencil and paper, is mathematics and should not be patentable. That would take care of a large part of the backlog.
To me, the most troubling part of the article is the statement that the patent office hires lots of examiners right out of college. How can a recent grad who has not practiced make an accurate assessment as to whether an idea is obvious to a person skilled in the art? And how would such people have the experience to know what's already prior art and where to look for more? Small wonder that the USPTO has obtained the reputation of rubber-stamping 90% of applications and letting the courts decide whether the examiners have done their job or not. This puts a huge financial burden on industry, which must choose between hiring lawyers or engineers, and a chilling effect on small companies which are constantly in danger of being sued or threatened by patents which should never have been granted in the first place.

The patent office is also one of the few U.S. agencies that lacks regional offices that would let it tap into a broader pool of technically-savvy examiners than it can find in the Washington D.C. area.